Apple is now a $3 trillion company.
Tim Cook and Cupertino had previously hit the mark in January 2022, but supply chain issues and a weaker macro environment pulled Apple’s value back down.
This time, Wedbush's Daniel Ives sees even more room for the stock to run.
Ives is reiterating an Outperform rating and $220 price target.
“The Apple bears and skeptics continue to scratch their heads as many have called for Apple's ‘broken growth story’ this year in a tougher backdrop to which we firmly believe the exact opposite has happened with Cupertino heading into a massive renaissance of growth over the next 12 to 18 months,” Wedbush analysts, including Ives, wrote in a note to clients Friday.
“In our opinion, the Street has severely underestimated the massive installed base upgrade opportunity around iPhone 14 and now a mini super cycle iPhone 15 ahead with roughly 25% of Apple's golden customer base not upgrading their iPhones in over four years.”
In other words, “Apple [is] playing chess while others play checkers,” they added.
In fiscal 2024, Apple is on pace to approach $100 billion in annual services revenue. That’s “a jaw-dropping trajectory” compared to the roughly $50 billion in services revenue Apple posted in fiscal 2020.
At this rate, $3 trillion could be shortchanging Apple’s long-term valuation.
“We believe Apple's fair valuation could be in the $3.5 trillion range with a bull case $4 trillion valuation by full year 2025,” the analysts wrote.
Looking ahead, Apple is building out what amounts to a new app store and technology “moat” that Wedbush believes can give it a massive advantage in the tech battle for developers.
“We continue to strongly believe this is the first step in a broader strategy for Apple to build out a generative AI-driven app ecosystem for its golden customer base that will have thousands of use cases across fitness, health, sports/movies via Apple and partner (e.g. Disney) content, and a myriad of other areas just starting to take shape with developers,” the analysts wrote.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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